(John Ransom, Headline USA) According to media reports, the Biden administration was bracing for an “extraordinarily” high reading before the Tuesday morning release of the official inflation numbers.
On Monday, White House propagandists frantically began to spin the situation by deflecting blame onto Democrats’ favorite scapegoat, Russia.
“We expect March CPI [consumer price index] headline inflation to be extraordinarily elevated due to Putin’s price hike,” Psaki told reporters, according to Yahoo Finance.
It came in higher.
The Consumer-Price Index was up 8.5%, the largest increase since 1981, according to the Bureau of Labor Statistics. Gas prices accounted for about half the gain, while wages increased only 5.6%, meaning paychecks are struggling to keep up with the rate of inflation.
The food index increased 8.8% in March, with food at home increasing 10% while food eaten away from home increased only 6.9%.
Fuel oil was up 70% and gasoline was up 48%.
Echoing what has now been a yearlong refrain of “transitory” inflation, economists hoped that March would signal the peak. However, the continued inflationary trend signals a high possibility that the economy is facing a recession sometime in the near future.
While gas prices could moderate temporarily with the release of the nation’s emergency oil supply, the summer driving season could bring pump prices roaring back.
“Risk of a recession is rising due to the series of supply shocks cascading throughout the economy as the Fed lifts rates to address inflation,” Joe Brusuelas, chief economist at RSM told the Wall Street Journal.
As the Pew Center noted back in December, the prices of gasoline had been increasing for quite some time before the Russian invasion of Ukraine was even publicly contemplated.
“Regular gas costs, on average, 58.7% more than it did a year ago this time—$3.491 a gallon last month, versus $2.20 in November 2020, according to the federal Energy Information Administration,” said Pew.
Tuesday’s inflationary numbers meant that the grim outlook prompting the Federal Reserve to raise interest rates soon has not moderated.
“Many participants noted that one or more [0.5-point] increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified,” the Fed minutes from its March meeting said, according to Fox News.
Investor Bob Doll told Fox Business host Stuart Varney that he thought that inflation had peaked and would end the year around 4%, but that meant bad news for the stock market.
Varney asked Doll how the stock market could rally under conditions where the economy ended up with 4% inflation by the end of the year.
“Don’t think it will happen. I think the high for the year, sadly, was made in the first week of the year,” Doll said about the stock market.